Borrowers looking to refinance their student loans can take advantage of a new discount offered by Citizens Bank. The Providence-based bank announced the promotion last week, which is aimed at helping borrowers pay off their loans faster.
The bank’s Education Refinance Loans offers a discount of up to 1% on the principal balance, up to $500, when applying for the loan between September 5 and October 15 of this year.
“As a national lender, Citizens Bank is committed to partnering with its customers during each and every important stage of their life,” said Christine Robers, head of Citizen Bank’s Student Lending, in a press release. “Going to and paying for college is an important milestone that enables all of us to pursue our career goals. Just as importantly, being able to refinance student loans allows borrowers the freedom to reach their potential.”
The refinance scheme provides private and federal student loan borrowers the benefit of having one low monthly payment, and the opportunity to switch from a variable to a fixed rate loan.
The bank says borrowers who refinance through their loan program save an average of $128 per month and as much as $1,536 per year.
Citizens Bank adjusted its interest rates on private student loans in July, according to LendEDU. Undergraduate loans now come with a variable rate range between 3.12% and 11.22%. The range was previously between 3.99% and 10.99%. Fixed interest rate loans remained the same, with ranges between 5.74% and 11.99%.
The variable interest rate for graduate loans also changed, with rates now between 3.12% and 10.87%.
Refinancing student debt can help some borrowers save money, but those with federal loans will give up unique benefits by transferring their debt to a private loan, including deferment, forbearance and income-based repayment plans.
Refinancing will also require borrowers to have excellent credit and enough income to support the payments. Borrowers who have missed payments or defaulted on loans will likely not qualify for a refinance loan.
Experts warn that borrowers should be confident in their ability to repay the loan before signing on the dotted line, especially if the borrower holds federal debt. Private lenders are not as flexible as federal lenders when it comes to late payments.
News of the bank’s refinance loan scheme comes as student loan debt in America has reached an historic high of $1.4 trillion. The average student graduates with $34,144 in debt.